Multi Benefit Platform And Defense Exposure Will Drive Powerful Long Term Upside

Catalysts

About Brockhaus Technologies

Brockhaus Technologies is a technology group that scales niche market leaders in digital employee benefits and mission critical KVM solutions.

What are the underlying business or industry changes driving this perspective?

• The rapid expansion of Bikeleasing's customer base to 81,000 corporates with 3.9 million employees, combined with historically low utilization rates per employer, creates substantial embedded volume upside as adoption deepens. This supports sustained double digit revenue growth and operating leverage driven earnings growth.
• The transformation of Bikeleasing from a single product bike leasing offering into a broad digital multi benefit platform via Probonio and Bike2Future positions the group to capture structurally rising demand for flexible, tax efficient employee benefits. This increases recurring SaaS revenues and structurally higher net margins.
• Internationalization, with Bikeleasing's leading position in Austria and the strategic stake in U.S. micromobility platform Ridepanda, opens access to much larger addressable markets as employers globally push for sustainable mobility and talent retention solutions. This drives long term revenue compounding and a more diversified earnings base.
• IHSE's growing exposure to the structurally expanding defense and government digital infrastructure market, already lifting gross margins to around 83% and defense to roughly 45% of segment revenue, is expected to translate into a richer product mix. This supports improving group gross margin and robust EBIT growth as volumes normalize.
• Substantial upfront investments into new product generations, software capabilities and an ERP program across the group, combined with a conservative leverage ratio of about one times EBITDA, position Brockhaus Technologies to convert its scalable and cash generative model into stronger free cash flow and rising earnings once growth initiatives roll off and cost measures fully materialize.

Assumptions

This narrative explores a more optimistic perspective on Brockhaus Technologies compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Brockhaus Technologies's revenue will grow by 14.4% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -27.2% today to 5.2% in 3 years time.
• The bullish analysts expect earnings to reach €16.6 million (and earnings per share of €1.58) by about December 2028, up from €-58.4 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €0.0 thousand.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 41.8x on those 2028 earnings, up from -1.9x today. This future PE is greater than the current PE for the DE Electronic industry at 41.4x.
• The bullish analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.98%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Bikeleasing’s growth is increasingly dependent on a structurally weak German consumer and investment climate, where extreme retail discounting makes cash purchases more attractive than leasing and a growing number of corporate customers are blocked due to deteriorating credit scores in Germany, which can cap unit volumes and slow revenue growth.
• The strategic shift from a highly profitable core bike leasing product to a broader multi-benefit and used-bike platform via Probonio and Bike2Future requires materially higher personnel, marketing and operating expenses while SaaS revenues and activated employees are still low and opaque, which risks structurally lower net margins and weaker earnings if monetization lags spend.
• IHSE’s improved gross margins rely heavily on the fast growing defense and government business and the Americas region, while EMEA and APAC revenues are already down 14 percent and 49 percent respectively in a subdued investment environment, so any slowdown or budget reversal in defense could expose underlying weakness in other verticals and pressure group revenue and EBIT.
• Group profitability is currently under strain, with adjusted EBITDA and EBIT down 28 percent and 33 percent year over year, rising OpEx from growth initiatives and ERP spending and a heavier reliance on resale proceeds with lower gross margins in Bikeleasing, which could persist longer than planned and delay the expected improvement in free cash flow and earnings.
• The international expansion strategy, including Austria and the minority stake in U.S. micromobility provider Ridepanda, targets markets without the same favorable salary sacrifice framework and depends on employers subsidizing subscriptions, which may limit long term adoption and scalability and constrain the contribution to consolidated revenue growth and margin accretion.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Brockhaus Technologies is €50.0, which represents up to two standard deviations above the consensus price target of €34.5. This valuation is based on what can be assumed as the expectations of Brockhaus Technologies's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €50.0, and the most bearish reporting a price target of just €24.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be €321.3 million, earnings will come to €16.6 million, and it would be trading on a PE ratio of 41.8x, assuming you use a discount rate of 10.0%.
  
• Given the current share price of €10.7, the analyst price target of €50.0 is 78.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.